Average Price Of Smartphones Set To Plummet To $US$294

Smartphones are set to be cheaper next year with the average selling price set to fall significantly, according to research group IDC the average price of a smartphone is set to fall to $295 by 2017.

This year sales of smartphones are set to surpass one billion units delivering 39.3% growth on year for manufacturers, however a 12.8% fall in the average selling price is set to hit carriers like Optus and Telstra along with mass retailers who are banking on demand for smartphones to replace a fall in demand for PC's.

Despite a number of markets nearing smartphone saturation, including Australia, demand for low-cost computing in emerging markets is set to see smartphone sales grow to 1.7 billion units, resulting in a compound annual growth rate (CAGR) of 18.4% from 2013 to 2017, IDC said.

In addition, Android has enabled a number of new manufacturers to enter the smartphone market IDC said. Many of these makers have focused on low-cost devices as a way to build brand awareness. As a result, smartphone ASPs are falling at a steady pace, IDC said.

Smartphone ASPs will gradually drop to US$265 by 2017, IDC predicted.

"The game has changed quite drastically due to the decline in smartphone ASPs," IDC analyst Ryan Reith said in a press release. "Just a few years back the industry was talking about the next billion people to connect, and it was assumed the majority of these people would do so by way of the feature phone. Given the trajectory of ASPs, smartphones are now a very realistic option to connect those billion users."

"The key driver behind smartphone volumes in the years ahead is the expected decrease in prices," IDC mobile phone team research manager Ramon Llamas said in the same statement. "Particularly within emerging markets, where price sensitivity and elasticity are so important, prices will come down for smartphones to move beyond the urban elite and into the hands of mass market users."